Cliffs accepted KWG's invitation to become a principal investor in order to participate in its development initiatives. Cliffs sought and was given KWG board representation coincident with acquiring an equity interest of slightly less than 20 per cent, plus a continuing option to increase or maintain that interest through further investment.

KWG has now acquired half of the royalty underlying its property and the adjoining property of Freewest after an independent economic analysis based on conceptual planning and market forecasts undertaken by Cliffs. The royalty is expected to yield a substantial monthly cash flow to KWG if production ensues. The North American market alone might absorb ore production of up to 4,000 tons per day. That quantity of material will require construction of a railway to transport the partly treated ore to a ferro-chrome refinery ideally located near transportation to markets and to electricity supply for the electric-arc furnaces used in the process. KWG is examining a number of location alternatives as well as the available furnace technology options.

KWG has also had preliminary discussions with the Ontario Northland Railroad to examine collaboration in the construction and operation of the railway from the deposits to Nakina, where it can connect to existing rail lines. ChromeCana Inc. has been created as a wholly owned KWG subsidiary for the purpose of development of the mines and railway, and is undertaking pre-engineering assessment of a proposed right-of-way for the railway.

Initial indications continue to confirm the capital cost assumptions considered by Cliffs in its preliminary market sensitivity analyses, undertaken prior to the KWG investment. This analysis has been provided to the Toronto Stock Exchange for its review of KWG's application to graduate its share listing from the TSX Venture Exchange, on the basis of its interests in the deposits.